UK-Swiss Confederation: Taxation Co-operation Agreement (terminated)
Updated 4 January 2017
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Termination of the agreement
The UK-Swiss Confederation Taxation Co-operation Agreement ended on 31 December 2016.
An agreement terminating the UK-Swiss Taxation Co-operation Agreement was signed on 14 November 2016 by HM Revenue and Customs Permanent Secretary and Executive Chair Edward Troup and the Swiss Ambassador to the UK Dominik Furgler.
The UK and Switzerland have signed up to the Organisation for Economic Co-operation and Development’s Common Reporting Standard: a global agreement to annually and automatically share financial accounts data. Switzerland will collect data to send to HMRC about UK taxpayers. HMRC will use this information to take action against those who seek to escape paying what they owe by hiding their money offshore.
From 1 January 2017, UK taxpayers can’t pay a withholding tax to stop their information being shared with HMRC. UK taxpayers with assets abroad must make sure their tax affairs are correct and up to date.
See the main UK-Swiss Confederation: Taxation Co-operation Agreement page for the full termination agreement. The original agreement is also available.
For more information, see the UK’s Automatic Exchange of Information agreements.
Background
The original tax agreement between the UK and Switzerland was signed on 6 October 2011 by the Exchequer Secretary David Gauke and the Swiss Finance Minister Eveline Widmer-Schlumpf.
On 20 March 2012 the UK and Switzerland signed a Protocol to the tax agreement.
This Protocol clarified the relationship between the agreement and the EU Savings Agreement (EUSA) with Switzerland - where a relevant person has suffered withholding tax under EUSA, an additional 13% ‘tax finality payment’ will need to be paid to obtain tax clearance under the terms of the agreement. This achieved the same effect as the 48% withholding tax levied under the original terms of the agreement.
It also introduced a new Inheritance Tax levy on the death of the relevant person unless their personal representatives authorised the Swiss bank to disclose the account details to the UK.
Article XVIII of the Protocol gave the UK the right to have any beneficial changes in the operation of the formula which calculates the one-off payment for the past agreed between Switzerland and Germany incorporated into the UK agreement.
On 18 April 2012 letters were exchanged informing Switzerland that the UK wished to exercise this right.
This meant that:
- the minimum rate payable increased from 19% to 21%
- where under the original formula the tax rate applied in a specific case would have been 34% and that rate would have been applied to at least £1 million in relevant assets, then the tax rate applied increased in steps of one percentage point for each additional £1 million, up to a maximum of 41%, meaning that the rate payable on £7 million or more will be 41%